Health Care Bill a short, medium and long term negative for economy and dollar

Jonathan Ratner
Financial Post
Nov 19, 2009

The document:

•The U.S. Senate’s health care bill weighs in at a hefty 2,074 pages – more than War and Peace. The table of contents alone is 14 pages. The document also comes in well ahead of the House’s 1,990-page reform bill when it was introduced.

The details:

•The cost of the Senate bill is US$2.5-trillion over 10 years of full implementation (2014-2023).
•Taxes will rise nearly half a trillion dollars, or US$493.6-billion, while Medicare will be cut by US$464.6-billion.
•The bill includes a government run plan and allows states the possibility of opting out. The government run plan typically offers premiums that are somewhat higher than the average premiums for the private plans in the exchanges, according to the Congressional Budget Office.
•The bill will also impose US$28-billion in new taxes on employers that do not provide government approved health plans at a time when businesses are still cutting workers.
•The Senate could hold its first vote on the package by the end of the week.

The bottom line:

•If the bill becomes law in its current form, it will be a short term, medium term, and long term negative for the U.S. economy and the U.S. dollar, according to Andrew Busch, Global FX Strategist at BMO Capital Markets. “It fails to reduce costs and it increases the government role in 17% of the economy,” he said in a note.

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